>> how do you actually get inflation under control, especially with the love of the beyond central banks and policy control? >> the only thing you can do is tampa demand to bring economy back to equilibrium. >> i wouldn't suggest we are out of the woods when it comes to inflation. >> the fed has abandoned the specific 2% range target. >> indicators are indicating that we are on a slow pack. >> this is "bloomberg surveillance" with tom keene,

jonathan ferro and lisa abramowicz. tom: good morning. tom -- an important friday. six days from that media point. kailey leinz is in for jonathan ferro. is he back monday, lisa? it's like 50-50, right? [laughter] he is on a runway wherever he is and he can't get home because of reddish airways or whatever. lisa: we can look forward to his return. there is an issue of what happened this week, it was a fascinating week. maybe biggest question, is the bond market rally we have seen a good or bad thing for risk assets? what does it mean? tom: the spread has not removed all that much, maybe it is a churn. we will look at that with amy wu silverman. what i want to go to the tea leaves out there, javier blas

on hydrocarbons nails it. on the european coal, he is noting, $434 per ton. a little more than $100 per turn from where it was during the invasion. this is a serious statistic. lisa: it is, because of the plan germany has in place. if they pass the threshold in terms of depletion of their natural gas, they are going to turn to coal. this is a nation that has been trying to make energy cleaner. and if reserves start to go down, they start with gas rationing. this is a political hot potato that will have to be discussed. tom: whether it is in france or not, i i'm sorry, we can link together javier blas, and coal

in germany, with the riots we see in ecuador. all of these tensions are wrapped around price change. kailey:. kailey: it's the rising cost of living entities creating political unrest. it is reflected in the results of elections in others like in the u.k., with those by-election that results we saw. the conservative party is taking the heat for the cost of living raise in the u.k. the fear of an economic slowdown. tom: francine in london says, tom, nice use of french. did you get that, kailey? [laughter] let's do a check. apt29 on futures. the vix is nicely in, an important item of good feeling in equities, 28.70. dollar churning here, but resilient, 104.

the euro-u.s. dollar, 1.05 37. lisa: it is fascinating to me. we are getting more concerned being spoken by fed chair jay powell and growing numbers of economists and yet there is a rally in bonds and in stocks. 10:00 a.m., do we continue to get the rally with the university of michigan sentiment survey, considering it is expected to fall to a new post-2010 low? how much are we looking at inflation expectations in the next five to 10 years climbing? what happens if we see them climb further and bond yields continue to go down? what does that mean in terms of credibility? and whether the market is underestimating how aggressive they will be? at 4:00 p.m. we have, the imf's kristalina georgieva speaking

about the economic outlook. how much does she signal it weakening outlook based on their previous forecast and how that deaf tails into the international stress and strife stemming from higher prices and weaker economic backdrop? tom: so glad that you did this with the imf director. can you imagine the halls of the imf in washington right now, with tunisia, ecuador and em currencies giving way? which meeting this should go to next? 0 lisa: and what is her policy recommendation235 when the stronger dollar only pressures these nations further? we have leaders gathering in germany for a three-day summit ahead of the annual nato summit in madrid. what can they talk about and what will they do about it other than simply offsetting it with fiscal spending and supplementary income, as some

people think is likely in europe? tom: we will just have to see how it. our international team will give some good perspective on that. i know that annmarie hordern and maria tadeo are really focused on the g7 meetings with president biden coming up. i demanded that we speak with amy wu silverman, who is writing brilliant notes for rbc capital markets. a hugely controversial note this summer. amy, you say that this summer is different for volatility. discuss. amy: good morning. normally you look to history, the last 30 years and you see that this is supposed to be a little time for the vix, it is supposed to be when people go to vacations and volumes are lower. i don't think that will be the case. i think you are already starting to see that the economy. out in single stocks.

the ongoing theme in derivatives markets has been why hasn't volatility been higher? but you are seeing that in the single names. as earnings come around, we will see the overall level even higher than we do for the levels that are already high right now. lisa: weigh in on the markets right now. our people looking -- is it already big spain? amy: it is a tough question. on the broader etf level, the complacency is there and has been right now. on the single stock site, they are seeing the pickup in demand for downside protection, which tells me idiosyncratically that it is not baked in on many stocks. and this is not unique to one sector, it's not just energy or long-duration tech. this is across-the-board. it is almost as if people are quickly monetizing the hedges on the index site as overall

markets go down. but they're still seeing the war economy. i think as earnings start to come into play in mid-july, that will become a key theme and we will see that is not quite baked in yet. lisa: this adds to my confusion about the complacency in markets this week. they keep wayne back to the question, the bond market rally this week, is that a good thing , or a bad thing for stocks? amy: here is what i will say. when we look to the options market, there are a lot of bond proxies that you can use to play. i will tell you that there are still a lot of hedges going on. the way i would think about it is, the derivatives market is certainly not saying that everything is warm and rosy. yesterday to see that not in the s&p, but in bond bull proxy

etfs. it has been the case consistently through the years as people monetize. so as we get into the summer,, i think you are in a dead zone right now but as we start to get more information coming in as we get earnings and cpi numbers, that will start to trickle in again on the bond proxies. tom: really since the start of the pandemic and the boom of meme stock trading, i have been talking to you about retail activity. kailey: they were all in on-call options and the always bought the dip. but jp morgan yesterday was talking about how that has changed. their data issuing they reached the heaviest filling since september of 2020. what are you seeing in terms of retail activity? amy: there is a nuance i want to make. and people speak about retail, there are two kinds of retail. there are people who are yolo-in

g gamestop options and things like that. and then there are people like tom's portfolio, for instance. tom: triple average all-cash? [laughter] amy: so i think that retail, the people who play the gamestop and amc and crypto have capitulated and you see that in the derivatives market, but that is not true necessarily of the pwf retail crowd. are you sitting through this market or capitulating? what is interesting is we may not see that, because they are trained to ride through these markets. you may not get a capitulation from that cohort. tom: you mentioned 40 on vix as being the new 30. are you predicting that we will enjoy a catharsis to 40 on the vix? amy: it is possible. i like to bring it back to how you feel are daily basis. it is a plus or -2.5% move on

the day compared to other 30 vix. do i think we could get that? very possibly. tom: do something constructive over the weekend. i want you to check the kurtosis of my triple leveraged all-cash fund. it is really painful. amy wu silverman, brilliant as always, with rbc capital markets. [laughter] cash is something we are talking about, lisa. one of the most interesting as we heard this week, federated hermes talking about cash moving from 3% to 6%, long-only, by side holding. that's a big deal. lisa: my favorite part of the morning is when the guests humor you and sit there wondering, when do i get to leave? [laughter] but this has been an asset class. we do see flows into cash for the first time. tom: let me do a data check, 28

on spx. the vix is impressive. 28.67. brent crude, $111.51. please stay with us on radio and television. this is bloomberg. ♪ ritika: keeping you up-to-date on the news. fed chair jerome powell calls his commitment to curbing inflation unconditional. he wrapped up two days on testimony on capitol hill by warning that fed is far from its inflation target. meanwhile fed governor michelle bomer and says she supports raising interest rates by 70. five points again next month. it is being called the biggest breakthrough in u.s. gun safety in decades. the senate voted to approve bipartisan legislation that will

improve background checks, secure schools, and gives states money to fight gun violence. the house is expected to pass the measure. the senate passed the bill hours after the supreme court issued a ruling that could mean more guns on the streets at big cities. in the u.k., prime minister boris johnson has suffered a major election absent. his party lost key seats in england. the liberal democrats won one new seat. shares of twitter are higher in premarket trade. twitter sent further user data this week to elon musk, who wants to buy the company. it includes information which allows his team to determine how many users are actually bots. last week, his lawyers sent a letter to twitter claiming that the data they had been sent was not enough. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta.

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i was just talking to the governor of new york about this. i am disappointed in the supreme court gun decision. gun laws in 48 states are still in place based on the decision. not good enough. i think it is a bad decision, i think it is not reason arguably. and i am disappointed. tom: the president of the united

states on an eventful day for america on not one but two just native decisions on guns. for those of you in new york, read the crime blotter of the new york post and you get a flavor for what we are living, and those of you around the country, from chicago to miami. what we have done at bloomberg, not just bloomberg surveillance, but across all of bloomberg, is get legal authorities who can assist us here on thinking through these very contentious issues. one of those is noah feldman of harvard university, a scholar writing on the mid-20th century supreme court of james madison. he was skating on justice thomas yesterday, no other way to put it. -- he was scathing on justice thomas yesterday. "increasingly this court appears

to be the thomas court, with the most conservative justice convincing the other conservatives to follow his lifelong practice of ignoring president in rejecting the idea that the real-world consequences of judicial decisions should matter to the courts." emily wilkins in washington this morning. let me stay on this judicial decision. what happens next for concealed carry in america? emily: you noted justice thoma'' opinion on the decision. it is important to note what justice kavanaugh kavanaugh and chief justice john their opinions, because their language was softer. they said that these laws in new york that so you can only have a permit if you have a certain job or certain other think, is no good, but you cannot have restrictions on concealed carry, it just seems to be the same restrictions across the board. it will be interesting to see how it may or eric adams of

new york -- mayor adams of new york and where these other cities are going to find ways to cut into the restriction, to figure out what cities can or can't do. tom: it is not bloomberg's idea to get into the political ballet, but what does this decision signal of the pending cases coming up? gerard: all of washington is very aware that we have a much more conservative court. the big case coming up is roe v. wade. we could see something on that as soon as today. the court added today as a decision today as a decision day, it was not initially. now, it might not come today it may come next week, but we have heard reports of police officers in d.c. getting ready for fallout from that decision today. obviously, it is being expected that this will really cut into roe v. wade, that it has the potential to bring things back to the states. we asked lawmakers, what will be

the next step congress can potentially take? the one thing we have heard from them is that it depends on what exactly the ruling says. but let's face it, congress has struggled to get through gun legislation. the idea that they would be able to do something more on abortion or even gun legislation would be very difficult to, given the current level of partisanship in congress. lisa: dovetail these hot button issues into the midterm elections and this complicating debate between social issues versus inflation. what does this do in terms of democrats' likely outcome from the midterms and beyond? gerard: i can actually let senate republican leader mitch mcconnell answer that for me. you told reporters yesterday that one of the reasons he was backing this package of gun proposals was, number one, he thought it was common sense, and number two, he thought it was important for midterms. it will help. suburban voters see that

republicans care about the issue, and it will be key in a number of races both in the house and the senate this november. there is definitely an election aspects to this. it will be interesting to see how much things like guns and abortion drive voters to the polls. it is the midterms, a lot of the game is on turnout, who you can actually motivate to come out and vote. when you talk to americans and posters, lawmakers, really the number one issue is still inflation. high prices at the gas pump, at the grocery store. i think that is why use arbeiter and call for the gas tax holiday -- you saw biden come out and called for the gas tax holiday. it leads to the question, what will they do to show the american people that they are taking this issue seriously. kailey: as we talk about issues related to the supreme court, these are hot button topics, second amendment rights and abortion rights. we know where the american

public opinion this is not aligned with the decisions the court is making, or at least the draft opinion shows they are ready to make. is there any conversation in washington about this? when president biden came into office, there was a conversation about court packing? gerard: there was, but there are the votes to be able to do something like that. even for some democrats, that would be far, to try to add additional justices to the supreme court. there are a couple of bills looking at the ethics of judges both in the supreme court and across the federal system, but that is taking a sideline to other legislation that we're seeing go through right now. these are definitely hot button issues, that we are at the point where we just have a congress that is not moving forward on a number of these things because of the partisan gridlock. even though you see these surveys showing that americans really do support a number of these issues, it doesn't always

translate into how they vote. that is why you are seeing congress as it currently is right now. tom: emily wilkins, thank you so much. lisa, to be kind, it will be a contentious summer in washington. lisa: yeah are especially with the court decisions likely to come down, going beyond people's expectations of where the court is likely to go. with emily said was fascinating, that in the republican party there is more willingness to go further on the legislation front to stave off the galvanizing effects socially for democrats to go to the polls. how much does that get something done in a bipartisan way? tom: i am not making a formal study of this, but loosely, i am looking at elections around the world, and the power of the ballot box is extraordinary, witnessed in england today. lisa, the size of the defeat of three small elections for the prime minister is extraordinary.

lisa: and the presiding issue in the united states, will it be inflation? will it remain that way or will it be social issues percolating in to the conversation in a massive way? tom: kailey leinz i think you nailed it, it is a culture thing. kailey: that is where we are in america now. tom: we will have more on this. i urge you to see their legal coverage of bloomberg opinion. truly extraordinary and informed. some of the great academics of this nation on the right and on the left, as well. coming up, we will talk with jan hatzius of goldman sachs. ♪

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tom: "bloomberg surveillance." jonathan ferro has a well-deserved week off. lisa abramovitz, kailey leinz and tom keene. the euro-dollar is flat. futures in the u.s. are up 30 two, advancing nicely.

nasdaq 100 up 1%. dr. jan hatzius is with us so we will go quickly. lisa. lisa: was looking at stocks that yesterday were much better than expected. fedex shares are up nearly 3% ahead of the open. they are seeing some labor shortages ease, profit margins come in better than expected, going against the gloom narrative. shopify bouncing a bit after ruling out new features, but those shares are down more than 70% this year. and twitter is up after reporting that they will give you learn musk whatever he wants to see in terms of data over the weekend, and elon musk was trying to back out of the price tag he had by asking for more -- that is my interpretation. looking at banks, given the fact that they will be rolling out buyback plans, interesting to see that citi is not participating. how much has been already baked in? bank of america is up 0.4%, jp

morgan as well. how much can these banks reprise the value of their shares given their stocks are down so far year to date, and they still have billions of dollars of suspected share buybacks coming? tom: thank you so much. jan hatzius of goldman sachs research has been about acuity. we will look at his work. we will go to one number, your q4 number. they marched down gross domestic product from a sterling 1.3% to sub 1%. that gives you direction of the recession call. but at the same time, jan hatzius calls for a shallow recession. if we get a shallow recession, quantify what it will mean for jobs in america. how does the magnitude of recession work in the dynamics of unemployment?

jan: let's be clear that we don't have a recession in our baseline forecast, we have significantly-below trend growth . but our best guess is that we will be below-trend. that rebalances the imbalance in the labor market. and it ultimately helps bring inflation back down. that said, there is a significant risk of recession that has gone up. it is very difficult to reduce labor demand without the deterioration feeding on itself and then ultimately culminating in recession. so we are giving a 1 in #3 chance of recession, and close to 50-50 in the next two years. in 2001 it was a 2% increase. . if you look at all the recessions in postwar history,

the top end of the range is 5.5%. i think if we do have the recession, it is likely that it would be on the shallower for two reasons, one, private-sector balance sheets are in better shape than at the end of previous business cycles. two where, inflation is very high, it is not as entrenched in expectations as it was in previous higher inflation episodes in the 1970's and early 1980's. lisa: people were ratcheting up their expectations for the funds rate up to 4% at some point next year. and here we are looking at a huge rally in 2-year yield's. can you translate the rally through an economic lens in terms, of what people are forecasting and whether it seems possible in your mind? jan: over forecast is a terminal rate of 3.25% to 3.5% by the end of 2022. we don't have any additional

rate hikes in 2023, basically because the economy is decelerating, inflation is coming down, and i think at that level, the fed would probably hold. you are right, we had priced something around 4% immediately after the fomc meeting. but i think people have looked at the fact that the economy actually is decelerating, and that has led to a reversal. i think fundamentally, that is appropriate. lisa: but given the fact that we are seeing deceleration, but not when it comes to the inputs into inflation, we are seeing france continue to climb at record pace, continuing to see disruptions to oil supplies and supplies causing the price increases, when do you start to talk stagflation and to talk about the fed that is forced to act despite the unemployment rate that is rising, and despite weakening economic data points?

jan: it is mixed when it comes to inflation indicators. no question, the last cpi number was bad. the rented number was bad. there was an increase in the long-term inflation expectations measure from the university of michigan. but supply chain measures are getting better. you look at the business surveys, those are coming down. the wage numbers in 2022 have been sequentially slower than the second half of last year. i think broadly speaking, inflation expectations, look at the breakevens in the bond market, still very well anchored, so it is a more mixed picture. and in an environment where growth comes to a below-trend piece, i don't think that the fed can keep hiking aggressively when the economy is already slowing and inflation is coming down. kailey: so what you are saying is that when chairman powell was speaking yesterday and saying

that our commitment to fighting inflation is unconditional, that there are conditions in which the fed blinks? jan: there are conditions where the fed blinks. partly because there is a feedback from economic activity into inflation. if the economy weakens and labor demand declines, maybe the unemployment rate starts edging up, then you will become less concerned about inflation. i think the commitment to ultimately getting back down to 2% is unconditional, that there will be other factors other than the current inflation. print that will drive what they do on a meeting by meeting basis. kailey: when we talk about the words jerome powell has used -- -- i talked earlier about the show that bill ackman talked about last night that the fed has a problem. he said ultimately that comes down to communication of the chairman. do you think the others in the

fomc are communicating to the market where it is the intent to do? jan: i think they are accurately communicating in ways that are not clear, that they want to get back down to 2% eventually. they are tightening policy much more aggressively than they expected to do six months ago or 12 months ago, in part because inflation turned out to be much higher. so i think at that level, it is clear. on the credibility problem, i would say look at inflation breakevens. the credibility from the bond market perspective or from the perspective of forecasters of the 2% inflation target still seems intact. tom: i want to talk about peter orzag. london school of economics. are we completely misjudging the second and first derivative of core inflation coming in where

it may come in shockingly, rapidly, if we underestimate that good news? jan: i think core inflation is likely to come down. in fact, if you look at statistical measures of core inflation like the print mean index, that has not been moving the last few much. still too early to tell how much weight to put on it, but the last couple of readings have been more encouraging and i think that suggests that over time, core inflation is going to come down. we are at about 4% for core pce and then 2.5% by the end of next year. i don't think it is going to happen overnight, but i think we are headed in that direction. tom: when jerome powell says we will get back to 2% inflation, that is what he is talking about. you say he will get his wish in 18 months?

jan: not quite. 2%, 2.5%. tom: 2%, 2.5%, who is counting? jan: especially when you look at this as the average inflation target. whether there is recession here or not -- our best guess is not -- but there will be a recession at some point that will bring inflation down a bit. tom: i should say that i am busting his chops. there is a big difference between 2% and 2.5% inflation. jan hatzius with goldman sachs, thank you for coming in. the headline, lisa, no question about it, a shallow recession. the magnitude of recession has been underplayed with the doom and gloom out there. lisa: and the fed is not going to be as aggressive as people are currently pricing in and that is why you are seeing that reflected in the bond market today, considering that 3.25%

terminal rate he is forecasting is well below the 4% yesterday. tom: i am looking at 4 bps up under 2-year yield. lisa: ok, you put the narrative to that. i am actually looking at the point of credibility also. [laughter] if you look at the futures, take a look at breakeven rates, they are close to the 2% level in the next five to 10 years for the federal reserve. it seems to support that even with a less aggressive fed, we will get there. tom: it is about headline inflation for so much of america kailey. kailey: and the chairman spoke to that, americans feel that gas and energy bills is what they are facing. the probability of getting inflation down, it isn't so much about their confidence of getting that down. nominal yields are coming lower because of concern around a recession, even if it is

shallow. tom: futures are up 29, the nasdaq up 0.9%. jan hatzius is sticking to it. maybe he will come back again. stay with us. ritika: keeping up-to-date the first word. actions by the u.s. senate and the supreme court have underscored deep divisions over gun policy. the senate voted 65-33 to approve gun safety legislation that calls for improving background checks, securing schools, and giving states money to combat gun violence. the house is expected to approve the measure. the senate passage came hours after the supreme court issued a landmark ruling that would mean all guns on streets of the big cities. five republican members of congress are said to have contacted the white house after the 2020 election, seeking pardons from president trump.

that's according to video testimony played by the committee investigating the january 6 insurrection. the congress men included matt gaetz, scott perry, rudy goehmert and mo brooks. wall street's biggest banks are set to return tens of dollars to investors. they all passed the federal reserve's annual tests of their ability to withstand market turmoil. the stress test shows that banks such as jp morgan, morgan stanley and goldman sachs could handle a severe recession. in the u.k., consumers are starting to crumple in the face of soaring prices. the government says the volume of goods sold in stores and online file in may. the hiking prices cost consumers to cutback in spending. and another poll says consumer confidence dropped to a record low this month. the former coo of softbank has received severance and incentives worth an estimated $94 million as part of his compensation. he left softbank in january,

after clashing overcompensation with the company's founder, masayoshi son. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries.. i am ritika gupta. this is bloomberg. ♪

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>> inflation is a huge challenge. it is driven by two primary terrible policy approaches from washington. we give up our advantage in energy and we took an anti-u.s. production approach. job one is to have a pro all of the above energy policy that includes promoting domestic production to recapture this domestic production advantage. tom: governor of virginia glenn youngkin with david westin on "balance of power."

great to meet him yesterday. he is concerned about inflation in virginia. there is a conference in zurich. someone else concerned about inflation is james bullard of st. louis. with him is philip lowe of austria, the rba governor who started in m.i.t.. bullard making headlines. lisa, help me here. he is more optimistic than the average bear. lisa: yes, talking about how the u.s. economy has shown tremendous resilience and talking about household balance sheet's not seeing signs of a pullback. is this a good thing or a bad thing for the fed that needs to get inflation under control at a time when people are accepting higher prices instilled by. tom: jan hatzius of goldman sachs is not calling for inflation. is bullard the most optimistic horse around the table? lisa: [laughs] i don't want to go around that far. the issue is if we have strength now, how does that translate six month from now in terms of what the federal have to do, and

where the economic indicators are pointing at the time? tom: in agreement with james bullard to a great extent is a gentleman with boston advisors, we are thrilled to bring you michael vogelzang. he has done so much in economics . we are thrilled he could join us this morning. michael, it dovetails with your view which is, lose the gloom on the friday, get out front by acquiring fixed income for higher price and lower yield. what fixed income do you acquire? michael: look, i think they fixed income market is reasonably well-balanced. given where we are with the known impacts of inflation and the somewhat uncertain doctrine of the economy, whether we have recession or not, likely to be 2023 if we do, we think longer term fixed income is a

reasonable hedge against increased equities. we have been adding to our equity positions given that we think risks are reasonably balanced. we are down on the average stock in the u.s., so we think now is the time to begin tiptoeing back into equity markets for long-term investors. but we would like to hedge that in case the economy gets really weak, with long-duration assets. we have been short oral -- short all year, but now we are starting to extend. lisa: how long can that continue, people going into both? michael: that is the $64 question, of course. we are interested in trying to understand what risks are in the market and what aren't. one of our favorite phrases at the firm is, price is the only thing that we know. everything else is speculation and conjecture. we know that prices of bonds are

up. the two year up to 3%. same thing with the equity markets, down substantially. we think that gives us good insight on what risks are out there, the risks are being recognized in the equity markets particularly and we may be early. you have probably heard this phrase," pessimists sound smart, but optimists make money." we are trying to be in the latter camp. lisa: how much are you looking at the chances of a soft landing and the optimists making money, even though there -- even though pessimists talking about recession sound smart? michael: it is out of the fed's control. you heard powell talk about the things he can control, right? but he cannot control what happens in russia and ukraine, to what happens to the long-term price of oil around the globe.

the food shortage and the higher prices of food, he can't control those things, except at the margin. he can control housing. and that is clearly something we are watching. as housing goes -- and we are starting to see the cracks in the foundation of this incredibly hard housing market -- we think that will be an important hell as we go forward -- important tell as we go forward. we think the fed can find a path to a reasonable soft landing like bullard and like jan are saying, if we get lucky. it could be difficult. kailey: given there is still a question around that and right now you are seeing yields going lower, where within equities are you buying? value, or growth? michael: as we have dug through the the treatise of the crash over the last three months --

the detritus of the crash over the last three months, it is hard to find anything that is screaming at us. i sent along a chart that shows the percentage of stocks in the russell 2000, or the number of stocks in the russell 3000, sorry, the broad market, trading at less than 10x earnings. the number is over 515. every time we have reached that level, and we have reached that level a handful of times in the last decade, you start to see really good returns going forward. so, when you're out, good numbers, and two years out, really good. we are starting to get into that territory. to meet those are things like housing, energy, some of the retailers -- to me, those things are housing, energy, some of the retailers. my portfolio is a hedge against the fed being right, that the fed wins the game and gains a

soft landing. the markets are expecting the earnings will follow. so if the fed is right and earnings come through for some of these inexpensive, more cyclical companies, you will see really good returns out of those. i think, by the way, it is time to start looking at the growth side, particularly the megacap side of the market. they are almost as inexpensive as they have been in 5, 6, 70 beers, on a price to sell basis -- 70 years on a price to sell basis. there is no clear and obvious, what we like to call the burning building, where you are getting paid to take a big chunk of risk. there is nothing like that, the market is reasonably well-balanced. tom: michael, thank you so much. lisa, there has been way too much optimism in the last 20 minutes. help me out here.

the camera lens almost broke there. lisa: lisa: he very well could be right. the soft landing looks possible and likely as long as there is some cooperation with the international sphere. i just keep going back to what he is saying, that the bond market is rallying and have stocks priced in the slowdown necessary to justify some of the levels we are seeing in the yield market? tom: we will have to see. it will be an interesting day in foreign exchange. futures are up 26. dow futures up 2.01. good morning to jonathan ferro. he may be back on monday. this is bloomberg. ♪

♪ >> the fed will be able to slow demand sufficiently. >> the fed is changing their policy narrative so quickly.